TeamPaper hopes to corral the Wild West of NIL
On June 21, 2021, College Sports as we know it changed forever. On that day, the case of the National Collegiate Athletic Association (NCAA) vs. Alston was decided in a unanimous Supreme Court ruling in favor of Alston (the plaintiff). The result has directly impacted trademark rights and how student-athletes may use their name, image, and likeness (NIL) for monetary benefit. Some have suggested it is one of the most impactful sports law decisions in US history.
The impacts? The jury is still out, and there is a lot of confusion. But there are entrepreneurs like TeamPaper trying to make NIL more clear and sustainable for college teams and the fans that love them.
How We Got Here
Colleges and universities have long used sports to drive revenue, draw attention, increase enrollment and raise funds from alumni. Until the Court’s unanimous 9 – 0 decision, the NCAA had relied on “amateur” student-athletes playing under rules that restricted how the schools could compensate them for their play.
Against that backdrop, a number of current and former student-athletes (including former West Virginia running back Shawne Alston) filed an antitrust lawsuit challenging the NCAA’s restrictions on compensation. Specifically, they alleged that the NCAA’s rules violate Section 1 of the Sherman Act, which prohibits “contract[s], combination[s], or conspirac[ies] in restraint of trade or commerce.”
At the time of the Supreme Court ruling, college sports fueled many thriving businesses including media, apparel, ticket sales, etc., with college football driving the vast majority of that ancillary revenue. For example:
- There are 392 college football broadcasts each season
- The average audience size for those broadcasts is 1.8M people
- Advertising revenue tied to those broadcasts tops $1 billion annually
Furthermore, at least ten schools pay their head coaches and coordinators in excess of $10M per year. Why? Because it’s proven to be a sound investment. The boost that a school receives in terms of donor excitement, national brand recognition, and solidifying its standing in a high-revenue conference is generally seen as a worthy investment.
In fact, one of the main drivers of the Supreme Court decision was around the disparity between the value generated by college sports versus the way the value was distributed. In his plurality opinion, Justice Gorsuch said, “The bottom line is that the NCAA and its member colleges are suppressing the pay of student-athletes who collectively generate billions of dollars in revenues for colleges every year. Those enormous sums of money flow to seemingly everyone except the student-athletes.”
That’s about as clear as it gets.
The Rollout: Year One Winners
To date, the decision has created something akin to the Wild West, where unequal outcomes are the norm. For example, the star QB might sign a seven-figure deal with a major soft drink company, while his linemen make a couple hundred bucks from a local restaurant. It’s not hard to imagine how these wildly disparate figures could negatively impact a locker room, and probably already have.
So, while everyone probably expected there to be a few bumps in the first year that NIL compensation was made available to student-athletes, the question is, what is the best way for schools to manage it moving forward? What are the unforeseen impacts of athletes as entrepreneurs?
One company that has a unique point of view is TeamPaper, a newly formed NIL-focused company with significant financial backing. They’ve been talking to players, coaches, administrators, and agents since July about the landscape of NIL within the NCAA.
TeamPaper Co-founder and former Harvard baseball player, Pat Griffin, said the impetus for them getting involved in the NIL market was their knowledge of the content creator economy and two realities that Griffin saw with regard to college athletes on social media.
“Currently, very few college athletes have an online presence that would command a significant income working as an “influencer” with brand deals. In fact, most would be getting on the order of $500 per semester if they worked hard selling sponsored posts. Their earnings would not provide any sort of financial stability post-graduation for the athlete,” Griffin said.
“Secondly, being a successful social media influencer is hard. Not even those who pursue it full time and achieve some level of financial success are able to sustain it. There is not enough time in the day to be an elite Division I athlete, do all of your schoolwork and be an effective influencer,” he said. “In a world in which personal endorsements were the main avenue for earnings, there would be only two big winners: All-Americans and/or Heisman favorites and the students who happened to already be famous on social media.”
As it stands, the superstars and mega-influencers of college football, who likely had riches awaiting them after they finished school, would be paid handsomely for their name, image, and likeness. In fact, TeamPaper estimates there are likely a dozen seven-figure athletes in the FBS right now. In addition, they believe there might be 50 plus making more than $100,000. But the income dropoff beyond that is precipitous, and there are 5,200 football players in the power five alone, with 98% of them falling outside of the top tier and not making enough money to save for after graduation.
In fact, TeamPaper cited one SEC team who reportedly raised more than $2M in NIL income, but an agent reported, “the QB is getting half of that.” And based on TeamPaper’s experience, another 5-10 players are splitting the next 45%, leaving 70 players are so to split $150,000, which is a little more than $1,400 each. Griffin notes, ”The level of inequality even on a top team doesn’t feel sustainable. On the other hand, it’s a huge opportunity because you have a lot of real impact players without brand deals and fans could fill in that gap.”
Going Forward: Booster Superheroes or Fan Armies?
You can’t talk about resources in college football without talking about the tried and true source: boosters. Boosters are an incredible resource for college athletic departments, and we would not have the amazing traditions and competition that we have in college sports without them. In the past 20 years we have seen them take facilities, the coaching staff, and the fan experience to the next level.
It’s all but a certainty that boosters will look to play an important role in helping facilitate NIL opportunities for student-athletes they love. However, there are potholes to avoid. One big concern would be over-paying the “market rate” for the services rendered. That’s an important stipulation of the NIL language. You cannot pay someone above and beyond the services they rendered, because that could be deemed an enticement to play somewhere. Since the market rate for advertising and appearances is fairly well established, it would be easy enough to establish what defines “enticement”.
Beyond any such compliance concerns, TeamPaper sees “wasted energy” if the fate of NIL at a program is left only to local business owners, boosters, and big brands. The boosters become the “champion battle” model, like the story of David and Goliath. The biggest most influential business people at two rival schools try to whip up local business support and charities where athletes can make appearance fees. Whoever has the most influence decides the NIL value at that particular school, and the fate of the millions of fans rests on their shoulders.
While the champions are important, the army of fans should matter just as much or more. The everyday fan can afford to pay the market rate for some exclusive offerings from the players, and with enough participation, it leads to much bigger dollars for the school.
The folks at TeamPaper understand this and have built their business around it. Because they have expertise in content creation services, they saw that same technology working to help mobilize a “fan army” at each school to help support their team. And that army has power: If just 1% of the fanbase subscribed to the team’s TeamPaper, it would very easily double the total pool of NIL dollars available to the players, and it would greatly improve the distribution across the team.
“We named our company very deliberately, because most athletes don’t have name recognition, and most fan loyalty is with the school over decades. So we wanted to give players a compliant way to work together and give fans a one-stop place to support a lot of players on the TEAM,” Griffin said.
“In addition to that, we want athletes to be publishers and build a community around their teams. They can give fans a type of feel-good fan club that only they can provide, knowing that the proceeds help strengthen the team. It’s also a more time-efficient approach, so athletes can focus on their academics and sports, not negotiating new ad deals or trying to build a stand-alone brand. They just need to be a part of the publication to collect their royalties,” he said.
In this new world of NIL, that seems to make the most sense. It allows fan bases to feel that they have a closer connection to the team, without being a big-money booster. It also gives them a sense of ownership when the team hoists a trophy because they helped maximize NIL earnings for their school.
Given the massive paradigm shift that NIL has created across the college sports landscape, that’s about as much as you can ask. For more information about TeamPaper, here’s an example of their work with the Alabama football players: https://teampaper.com/alabama
TeamPaper is a current sponsorship partner of Saturday Down South.